Jumbo Reverse Mortgage

If you have a client with an estimated or appraised value in excess of the FHA insured Reverse Mortgage maximum of $625,500 for either a refinance or a purchase, you may want to explore if a non-FHA Reverse Mortgage, often called a proprietary or "Jumbo", would make sense. Since a jumbo is not subject to FHA guidelines the products can change at any time. As an illustration, one such product offered as of April 1, 2016 has the following features:

- Percentage qualified for based on age of younger of two borrowers

- No FHA Initial Mortgage Insurance Premium (IMIP) or annual insurance premium required - but lender is taking on entire risk which is reflected in the interest rate, lower percentage provided and stricter financial assessment underwriting guidelines

- Amount eligible is paid as a lump sum only. There are no Line of Credit or monthly payment distribution options available

- Rate is fixed at 7.49% as of 4/3/2016. Actual rate may differ. This rate is higher then the FHA rates to reflect the fact there is no mortgage insurance program to protect the lender from default.

The following chart shows the amounts that would be paid by an FHA HECM vs. a Jumbo Reverse Mortgage at various ages and appraised values:

Value:	$625,500		$1,000,000		$1,500,000		$2,000,000		$2,500,000
	FHA	Jumbo	FHA	Jumbo	FHA	Jumbo	FHA	Jumbo	FHA	Jumbo
Age
62	$322,166	Not Allowed	$322,166	$205,082	$322,166	$310,000	$322,166	$415,082	$322,166	$520,082
70	$354,692	Not Allowed	$354,692	$285,082	$354,692	*$430,082*	$354,692	*$575,082*	$354,692	$720,082
75	$378,461	Not Allowed	$378,461	$375,082	$378,461	$565,082	$378,461	$755,082	$378,461	$945,082
80	$405,357	Not Allowed	$405,357	*$425,082*	$405,357	*$640,082*	$405,357	$855,082	$405,357	$1,070,082